Henry Review Considers Tax Concessions for NFPs

The Australia’s Future Tax System Review Panel (known as the Henry Review) has released its consultation paper which considers the main tax concessions available to Not for Profit organisations.

The Treasury paper outlines the submissions already provided to the review and discusses some of the main issues and further questions.

Submissions already provided in relation to NFP organisations include:
– expression of concern over NFPs establishing business ventures unrelated to their philanthropic activities
– extension of the mutuality principle to provide a complete tax exemption for member-based organisations
– the appropriateness of the current fringe benefits tax concessions available to NFP organisations, and
– concern that gift deductibility arrangements impose compliance costs on individuals and the rewards for giving vary according to the contributor’s marginal tax rate.

The consultation paper identifies the following questions, relevant to NFP organisations, on which the panel is seeking further community input:
1. What is the appropriate tax treatment for NFP organisations, including compliance obligations?
2. Given the impact of the tax concessions for NFP organisations on competition, compliance costs and equity, would alternative arrangements (such as the provision of direct funding) be a more efficient way of assisting these organisations to further their philanthropic and community-based activities?

Submissions can be made at any time up until Friday 1 May 2009.

The consultation paper and other information about the review is available on Australia’s Future Tax System website at www.taxreview.treasury.gov.au